Handicapping the 2011 Economics Nobel

If the bettors in a long-running pool are right, Harvard University’s Al Roth is going to get a call from Sweden early Monday morning telling him that he’s won the Nobel in economics.

So far, he has garnered 8.87% of the bets in a $1-a-wager pool run by Harvard graduate students on who will win the prize (properly “The Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel“). A noted game theorist, Mr. Roth helped design, among other things, the systems for matching kidney donors with patients and New York City students with schools.

Close behind is Yale University’s Robert Shiller, with 8.16% of the bets. The father of behavioral finance — a celebrated 1981 paper by Mr. Shiller struck an early blow against efficient markets hypothesis – he was also sounded warnings on both the dot-com bubble and the housing bubble.

Next is the University of San Diego’s Halbert White, with 6.38%. Little known outside the field, Mr. White pioneered statistical and modeling techniques now widely used by economists.

Other top bets: University of Chicago Booth School of Business behaviorist Richard Thaler, Harvard macroeconomist Robert Barro and University of Chicago econometrician Lars Hansen.

But in many years, the best bet has been that nobody will guess who the Nobel winner is. The pool players know this: 11.7% of the bets are on none of the above.

Thomson Reuters has another method of coming up with Nobel predictions, based on how often an economist’s papers are cited and how “high impact” those papers are. The Thomson Reuters picks are: Chicago Booth’s Douglas Diamond, the Massachusetts Institute of Technology’s Jerry Hausman, Mr. White, Johns Hopkins University’s Anne Krueger and George Mason University School of Law’s Gordon Tullock.

But there are plenty of other economists who could get the nod. Among them: Princeton University’s Christopher Sims, who developed a statistical method for teasing out the lines of cause and effect. Jean Tirole, of France’s Industrial Economics Institute, who’s an expert on the workings of “two-sided markets,” where different parties participation is contingent on the participation of other parties (think Google advertisers and Google users). And Yale’s William Nordhaus, best known for his work on environmental economics.

But even if we keep adding to the list — Dale Jorgenson and Oliver Hart at Harvard, Bob Hall and Paul Milgrom at Stanford University, Paul Romer and Thomas Sargent at New York University — none of the above may still be the best bet.

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